Xstrata is a major global diversified mining group. Xstrata maintains a meaningful position in six major international commodity markets: copper, coking coal, thermal coal, ferrochrome, vanadium and zinc, with additional exposures to gold, lead and silver. The Groups operations and projects span four continents and seven countries: Australia, South Africa, Spain, Germany, Argentina, Peru and the UK.

            Red = 25 day moving average.           Green = 200 day moving average.

SALES PER ACTIVITY (Data as of 31/12/2005)

Coal:       42%
Copper:    25%
Zinc:       18%
Chrome:   10%
Vanadium: 4%
Others:     1%

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Given the recovery in commodities and the market generally this one is a good price today.

After todays falls across the board the price of XTA looks even more interesting now.

Commodities rebound as risk appetite returns

By Kevin Morrison

Published: June 22 2006 18:21

Commodity markets started briskly with strong gains across the board in a sign that investors had regained their risk appetite.

However, towards the end of Thursday, most of the gains had turned into declines or pared gains in the case of oil.

In London, IPE Brent futures for August delivery gained 41 cents to $69.58 a barrel in late afternoon trade, off its intra-day peak of $70.01.

August West Texas Intermediate added 22 cents to $70.55 a barrel in late morning trade on the New York Mercantile Exchange. Oil prices have been boosted by the weekly US inventory report, that showed that petrol stockpiles had not risen by as much as expected. This in turn fuelled concern over tight supplies this summer when US petrol demand peaks.

However, gold prices dropped from their intra-day high of $594.80 a troy ounce to $584.40/$585.40 in late London trade, down almost $5 on the day. The market ignored positive comments from a Chinese central bank official, who said China should convert some of its foreign exchange reserves, the worlds largest, into gold to hedge against the dollars weakness.

Converting part of foreign exchange reserves into gold reserves would help protect and increase the value of reserve assets, said the article written by Luo Bin, an official with the central banks accounting and finance department, and Zhao Qingming, an economist at the banks institute of finance and banking.

The authors, writing in the May edition of the Chinamoney magazine, said buying more gold with foreign exchange reserves, at a record $875.1bn at the end of March, would help ease upward pressure on the renminbi.

Copper prices rose by more than 5 per cent at one stage to more than $7,000 a tonne yesterday, before succumbing to a bout of profit-taking that dragged prices down by more than $130 to $6,677 a tonne on the London Metal Exchange. Copper in LME registered warehouses extended their fall to critically low levels.

Robin Bhar, base metals strategist at UBS, said copper stocks held in the warehouses of other metal exchanges were similarly very low. The combined copper stocks of the three exchanges, LME, Comex and Shanghai Futures Exchange currently total 168,000 tonnes compared with about 800,000 at the end of 2003.

Mr Bhar said the current total equates to just under four days of global copper consumption and although there are stocks held by producers, merchants and consumers, exchange stocks are reported on a daily basis and are highly visible to the market.

It comes of little surprise then why copper prices continue to remain very high - there is little or no buffer against unexpected supply problems, of which there has been many this year, with consumers scrambling to restock amid strong demand, he said.

Market report: Thursday close
Mickey Clark, Evening Standard
22 June 2006

A COMMODITIES-fuelled rally and a strong performance by Wall Street overnight led share prices in London to high ground today.

Mining shares and oil companies were to the fore again as the FTSE 100 index climbed back above 5700, sporting a lead of 19.1 points at 5684.1. The price of crude oil on the world market rose back above $70 a barrel, reflecting growing tension over Iran and North Korea.

The price of raw materials such as copper and gold was also up sharply, with copper supplies threatened by a proposed strike in Chile.

Source: MarketWatch. - 23 June 2006

Gold closes higher; gains 1.1% on the week


Gold futures closed higher Friday and gained 1.1% on the week, as traders shrugged off dollar strength to focus on the yellow metal's longer-term outlook as a hedge against inflation and global political instability

After declining for most of the day, gold for August delivery reversed course shortly before the close to finish up $2.60 at $588.0 an ounce on the New York Mercantile Exchange. The contract ended at $581.70 a week ago.

Gold had dropped as low as $574.5 on Friday under pressure from the rallying dollar, which surged to two-month peaks against the euro and yen on Friday. The U.S. currency gained strength from market expectations the Federal Reserve will raise rates again next week.

Other metals prices were mixed. July silver added 7.50 cents to $10.285 an ounce and July copper was up 10.50 cents at $3.2405. July platinum dropped $9.20 at $1,166.9 an ounce and September palladium was down $4.10 at $309.80 an ounce.

After suffering considerable short to intermediate technical damage, gold is most likely going to have a broad trading range of $525-$625 through the summer doldrums," said Peter Grandich, editor of the Grandich Letter. "The long-term secular bull market remains intact and a new yearly high above $736 before year-end is still in the cards."

Deutsche Bank also recommended building long gold exposure, although it's bearish on gold and silver in the short term.

"The latest U.S. capital flow data reveal a further improvement in the country's modified basic balance," said analyst Michael Lewis in a note to investors Friday. "This offers a summer of U.S. dollar strength and with it further downside in the gold price. Even so we remain long-term gold bulls."

The metal is still an attractive hedge against "U.S. weakness, inflation shocks and skittish equity market conditions over the coming year," Lewis said.

Supply-demand fundamentals and investment influences are the factors affecting the gold market and both are supportive of gold, said Alan Heap, a Citigroup analyst based in Sydney.

"Mine production is constrained," Heap said. "It is expected to increase by only 2% this year. Demand has been affected by the high prices but will likely recover, as jewelry manufacturers stocks are depleted, even if prices remain high." The economic environment, particularly the inflation risks and global political tensions, also favor gold, Heap said.

At its meeting next week, the Federal Open Market Committee is expected to increase U.S. interest rates to 5.25% in its 17th consecutive rate hike.

"It [the expected Fed rate hike] is discounted into financial markets, but that does not mean there will not be a response on the day," Heap said.

James Moore of TheBullionDesk.com said that gold's performance in the next few days will be closely related to the movement of the dollar ahead of the FOMC decision on interest rates.

"For the moment $550-600 should offer a broad trading parameter although developments in the U.S./Iran and U.S./North Korea nuclear argument still have the potential to trigger a break out," Moore said.

Earlier in the week, North Korea was reported to be preparing to test launch a missile and Iran said it will only reply to a U.N. incentives package to dissuade it from enriching uranium only by mid-August, disregarding U.S. calls for a quicker response.

On the supply side, gold inventories were unchanged at 8.03 million troy ounces as of late Thursday, according to Nymex data. Silver supplies rose by 22,815 troy ounces to 104.6 million.

Copper fell by 64 short tons to 7,417.

Bloomberg - 23/06/2006

Copper Rises Most in a Week in New York on Signs Demand May Climb in U.S.


June 23 (Bloomberg) -- Copper prices rose the most in a week after a report showed a gain in orders of most U.S.-made durable goods, renewing speculation that demand will grow for metal used in wiring for cars, machinery and appliances.

Orders excluding transportation equipment rose 0.7 percent in May, including improved demand for computers and communication equipment, the Commerce Department said today. Copper, after doubling in the past year, has plunged 24 percent from a record high last month on concern rising global interest rates would slow economic growth and metals demand.

``Manufacturing continues to be in decent shape, and that's a positive for copper,'' said Donald Selkin, director of equity research at Joseph Stevens & Co. in New York. Current copper prices are ``a good area to buy'' after falling from the record high, he said.

Copper futures for September delivery rose 3.05 cents, or 1 percent, to $3.079 a pound at 10:24 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would be the biggest gain since June 16.

Copper for delivery in three months on the London Metal Exchange rose $16 to $6,725 a metric ton.

Gold May Rise on Concern Fed Will Struggle to Curb Pace of U.S. Inflation

June 26 (Bloomberg) -- Gold may rise for a second week on speculation the Federal Reserve will need to keep raising interest rates to curb inflation, boosting demand for an alternative to stocks and bonds.

Eleven of 28 traders, investors and analysts from Sydney to Chicago surveyed by Bloomberg News on June 22 and June 23 advised buying gold, which rose 1.1 percent to $588 an ounce in New York last week. Nine said to sell and eight were neutral.

Gold rallied 50 percent since June 2004, when the Fed began a series of 16 straight increases in the overnight lending rate between banks to combat higher energy, commodity and consumer prices. Fed Bank of Atlanta President Jack Guynn said last week inflation remains ``bothersome'' and that he sees ``elevated'' risks in the pace of price gains.

``The Fed is behind the curve,'' said James Turk, founder of Nassau, Bahamas-based GoldMoney.com, which stores gold for investors. ``They have been more focused on trying to keep the economy from buckling under than to stop the growing inflationary pressures.''

Gold futures for August delivery rose $6.30 last week on the Comex division of the New York Mercantile Exchange, ending five straight declines. The gain was expected by a majority of analysts surveyed June 15 and June 16. The Bloomberg survey has forecast the direction of prices accurately in 69 of 113 weeks, or 61 percent of the time.

Fed policy makers meet June 29 in Washington to review the current benchmark interest rate of 5 percent. The rate was at a 46-year low of 1 percent two years ago.

Too Little, Too Late

``Even if they raise rates by one-quarter, which is what I expect, it's still too little, too late to stop gold's bull market,'' Turk said.

U.S. consumer prices excluding food and energy rose 0.3 percent in May, capping the biggest three-month gain in the so- called core rate since March 1995, the Labor Department said June 14. The rise last month was the third straight that exceeded analysts' estimates.

Some investors buy gold to preserve purchasing power in times of accelerating inflation. Gold futures surged to $873 in 1980, when a jump in the cost of oil led to a 13 percent annual rise in U.S. consumer prices.

The Fed will raise the overnight lending rate by 0.25 percentage point this week, all but two of 122 economists said in a separate Bloomberg survey. Fed Chairman Ben S. Bernanke told a June 5 conference in Washington that recent gains in inflation are ``unwelcome.''

Longer Rally

``This gold bull market is only five years old,'' said Gregory Orrell, who manages $150 million gold investments including the $100 million OCM Gold Fund in Livermore, California. ``It still has at least another five years to go.''

The Fed's rate increase this week probably will be the last for this year because ``the U.S. economy is softening and the housing market is softening,'' Orrell said. ``The Fed doesn't want to totally implode the system. There's too much debt out there.''

The Conference Board's index of leading economic indicators fell last month by the most since September, the New York-based group said June 22. The index, which predicts economic activity for the next three to six months, dropped 0.6 percent after a 0.1 percent decline in April.

Building permits, a sign of future construction, fell 2.1 percent to an annual pace of 1.932 million, the lowest since November 2003, the Commerce Department said June 20. The National Association of Home Builders/Wells Fargo's index of builder confidence declined to an 11-year low of 42 this month, from 46 in May. A number below 50 means pessimists outnumber optimists. The index hasn't increased for the last eight months, the longest such stretch since 1994.

Dollar Weakness

Demand for gold also is improving on speculation the dollar will weaken against the euro and yen. Gains in the U.S. currency contributed to a 24 percent decline in gold from a 26-year high of $732 an ounce on May 12.

``We are starting to see gold claw back some of its losses as the market contemplates a more medium-term view of the dollar,'' said Alastair McIntyre, head of marketing at ScotiaMocatta in Hong Kong.

``Dollar strength is squeezing every possible drop of one or two rate hikes in the future,'' McIntyre said. ``But once the market figures out that that's it, along with prospects of a rate cut next year and Japan and Europe potentially tightening, the dollar has nowhere to go but down. Gold is sensing this and now is shaking off the correction.''

``The next rate hike, which was pressuring gold and stocks, is now well discounted,'' said Adrian Day, who manages $105 million at Annapolis, Maryland-based Adrian Day's Asset Management. ``The sell-off has probably been overdone. Below $600 is a good level to be building positions for the longer term.''

Xstrata, the mining group, will hold an EGM on Friday to seek shareholder approval for its planned acquisition of Falconbridge, the Canadian mining group.

Sounds like they've missed out.

The Times - June 27, 2006
From Eric Reguly in Toronto

Xstrata thwarted in its bid for Canada's Falconbridge


THE global ambitions of Xstrata, the Anglo-Swiss mining group in pursuit of Falconbridge, of Canada, were dealt a blow yesterday when Phelps Dodge, of the United States, agreed to buy both Falconbridge and its rival Inco for $40 billion (22 billion).

The three-way merger will create the biggest publicly traded copper and nickel producer, with annual combined sales of more than $25 billion, almost $8 billion in operating profits and 40,000 employees in 40 countries.

The new company, to be called Phelps Dodge Inco, will have its headquarters in Phoenix and will trade on the New York and Toronto stock exchanges.

With an enterprise value debt and equity of $58 billion, Phelps Dodge Inco will be the fifth-largest mining group, after BHP Billiton, Rio Tinto, Anglo American and CVRD, of Brazil.

Xstrata, which has bid C$52.50 a share in cash for the 80 per cent of Falconbridge that it does not already own, would not comment on its options, but executives close to the company said that Xstrata should not be ruled out of contention. They still have the only all-cash bid on the table and have the capability to go higher, one said. Its not over and they still have some time.

Would it be interesting if this company itself became a target for bidders from the likes of RIO?....or someone?

TORONTO, Jun 30, 2006 (The Canadian Press via COMTEX)

Falconbridge's shareholder rights plan will stay in place for now, OSC says


Falconbridge Ltd. (TSX:FAL) can keep its poison pill defence for now, Ontario's securities regulator decided Friday, denying Xstrata PLC (LSE:XTA) relief from one hurdle in its path to buying the Canadian mining giant.

That Ontario Securities Commission decision on the poison pill followed an Ontario court ruling that dismissed an application by Swiss-based Xstrata to force Falconbridge to hold an early annual meeting.

Xstrata owns 20 per cent of the Toronto-based copper and nickel producer has made a $52.50 Cdn all-cash bid for the rest of Falconbridge, which is at the centre of a major battle involving some of Canada's biggest mining companies.

Falconbridge and one-time rival Inco Ltd. (TSX:N) have been trying to complete a friendly merger since October, but progress on that deal has been stalled by regulatory delays in Europe.

On Monday, the Inco and Falconbridge struck a friendly $40-billion-US deal with U.S.-based Phelps, which has offered to buy both Inco and Falconbridge.

Also waiting in the wings is Vancouver's Teck Cominco Ltd. (TSX:TCK.B), which has made a $17.8-billion bid for Inco - on the condition it drop the Falconbridge deal.

The OSC said Friday the poison pill will remain in place until Xstrata takes up sufficient Falconbridge shares to meet its "majority of the minority condition," or until July 28.

"The Commission's decision to limit Xstrata's statutory rights until the 28th July is particularly hard to understand, given that it confers a distinct unequal advantage to Inco, whose offer closes two weeks prior to this date," Xstrata spokesman Marc Gonsalves said Friday.

"Xstrata will consider its position in the light of this (OSC) ruling, but we are clear that the SRP has to be set aside for Falconbridge shareholders to be free to accept our offer," Gonsalves said.

Xstrata had gone before the Ontario regulators on Tuesday, seeking to have the plan terminated because, it claimed, Falconbridge had failed to secure the necessary shareholder approval.

It also argued the plan deprived Xstrata of its right to buy additional shares.

Falconbridge's poison pill prevents a prospective acquirer from slowly increasing its stake in the company, by essentially flood the market with new shares, making a hostile takeover prohibitively expensive for an acquiring company.

It's triggered when someone acquires or announces its intention to acquire 20 per cent or more of the company without approval of the board.

Falconbridge has maintained the continued existence of the plan was in the best interest of shareholders, saying Xstrata's application was motivated by a wish to acquire the firm without offering a premium to all shareholders.

The panel did not release details of its decision Friday, but OSC lawyers had backed Falconbridge at a hearing Tuesday, saying it was in shareholders' interest to prevent Xstrata from buying just enough Falconbridge shares to block Inco's offer, shutting down the competitive auction process that now exists.

Xstrata's second blow came from Ontario Superior Court, which confirmed Friday that Falconbridge had acted in accordance with the Ontario Business Corporations Act Friday when deciding to hold its annual meeting in October - six months later than in previous years.

But Xstrata did get one piece of good news at a special meeting Friday, in which Xstrata stockholders with 555.9 million shares voted in favour of the Falconbridge takeover offer, while 975,248 opposed it and 5.6 million abstained.

The Xstrata and Phelps offers have been met with union and political opposition, and even Phelps's second-largest shareholder, Atticus Capital, said Thursday it may not back the deal.

"The main question I get from investors is about the debt level that Phelps will end up with," said Charles Bradford, and analyst with New York-based Soleil Bradford Research.

Phelps Dodge spokesman Stan Rideout said the company respects its shareholders views "and we strongly believe in the financial and strategic merits of our proposed combination with Inco and Falconbridge."

"We are confident that our shareholders will see the value of the transaction."

Daily Telegraph - By Cosima Marriner - (Filed: 04/07/2006)

D-day for Xstrata on Canadian bid


Crunch time is looming for Anglo-Swiss mining giant Xstrata, which must decide by Friday whether to increase its offer for Canadian nickel producer Falconbridge.

Falconbridge is the subject of a takeover battle between Xstrata and Canadian nickel company Inco, which is backed by US copper producer Phelps Dodge. Xstrata has offered $16bn (8.7bn) cash for the 80pc of Falconbridge it doesn't already own. Phelps Dodge trumped this offer last week, when it made a $40bn cash and share bid for Inco and Falconbridge.

Xstrata's hostile bid of C$52.50 (25.67) per Falconbridge share expires on Friday, a week before the friendly Phelps/Inco offer. Xstrata is currently deciding whether to extend the offer period, raise its bid, or walk away.

The company suffered a further setback late last week, when the Ontario Securities Commission refused to overturn Falconbridge's poison pill shareholder defence.

The regulator said the shareholder rights plan, which prevents creeping takeovers, could stand until July 28, two weeks after Inco's offer closes. Xstrata said this gave Inco "a distinct, unequal advantage".

Analysts expect Xstrata at least to match the Phelps/Inco bid, which yesterday had an implied value of C$58.42 per Falconbridge share. In this scenario, Xstrata's all-cash offer could be more attractive to Falconbridge shareholders than Inco's 70pc paper bid.

But Xstrata's chief executive Mick Davis has shown he will not pay over the odds for an asset, after he abandoned his tilt at Australian copper miner WMC last year when BHP Billiton made a higher offer. If Xstrata did walk away from Falconbridge, it would make a profit of $2bn on its existing 20pc stake in the company.

The Phelps/Inco bid is conditional on approval from the EU regulator, which could come as early as today.

Xstrata PLC
04 July 2006

INDUSTRY CANADA REVIEW PERIOD EXTENDED

Xstrata plc ('Xstrata') advises that it has been informed by the Investment
Review Division of Industry Canada that the Minister responsible for the
Investment Canada Act ('ICA') is unable to complete the consideration of
Xstrata's investment in connection with the proposed acquisition of Falconbridge
Limited within the initial 45 day period. As prescribed in the ICA, the Minister
has therefore extended the review period for up to a further 30 days (or such
other period as may be agreed) from July 3, 2006.

Mon Aug 21, 2006 9:10 AM BST148

Xstrata not looking at bid for Anglo


LONDON, Aug 21 (Reuters) - Swiss-based Xstrata was not looking at taking part in a possible bid for miner Anglo American, a source familiar with the situation said on Monday, denying a newspaper report.

"Xstrata have just bought Falconbridge and are focused on integrating that so they would not be thinking of biting something off as big as that (Anglo)," the source told Reuters.

The Observer newspaper said on Sunday, citing unidentified sources in London, that Xstrata, Brazil's CVRD and Rio Tinto were looking at a possible bid to break up Anglo American and had hired financial advisers.

The source said Xstrata had not hired financial advisers.

Xstrata declined to comment on the report.

Daily Telegraph - Market report - By Yvette Essen - (Filed: 07/09/2006)


Talk of a rights issue and open offer sent Xstrata shares falling 58p to 24.18. Dealers speculated the mining giant will have to raise $6bn (3.2bn) shortly.

Numis said: "We believe market expectations for the size of the equity issue post-acquisition of Falconbridge have declined markedly from $6bn-$7bn to $4bn-$5bn or even less. We think this is dangerous and maintain a base case of $6bn."

3 October 2006

Xstrata announces a fully underwritten rights issue of up to 235,787,596 New Shares at a price of 12.65 pence per New Share on the basis of one New Share for every three Existing Shares held on the record date of Monday, 2 October 2006.

The total net proceeds of the Rights Issue, after estimated aggregate costs and
expenses, are expected to be approximately 2.9 billion (approximately US$5.5 billion). The Rights Issue is being undertaken to refinance part of the US$7.0 billion Equity Bridge Facility arranged as part of the financing for the successful acquisition of Falconbridge in August 2006.

The Issue Price of 12.65 pence per New Share represents a 42.5% discount to the
closing middle-market price of the Ordinary Shares of 21.98 on 2 October 2006
(a 35.6% discount to the theoretical ex-rights price (TERP) of 19.6475).

Save in respect of New Shares which Glencore International takes up pursuant to the irrevocable undertakings it has given to the Company and pursuant to the separate underwriting commitment Glencore International has given to the Banks pursuant to the Glencore Underwriting Letter, the Rights Issue is fully underwritten by Deutsche Bank and, on behalf of its affiliate JPMorgan Cazenove, by J.P. Morgan Securities Ltd.

Glencore International and Credit Suisse Securities (Europe) Limited ('CSSEL') have the largest shareholdings in the Company, holding approximately 14% and 22% respectively of the Ordinary Shares. Glencore International has irrevocably undertaken to take up its full entitlements under the Rights Issue. In addition, CSSEL has agreed to transfer to Glencore International its entitlements in respect of 151,560,600 Ordinary Shares under the Rights Issue and Glencore International has also irrevocably undertaken to take up in full such entitlements. CSSEL (in respect of 151,560,600 Ordinary Shares) and Glencore International have agreed to lock-ups which, subject to certain exceptions, will expire six months after the latest time for acceptance and payment in full of entitlements to subscribe for the New Shares. A total of 84,200,333 New Shares are subject to Glencore International's irrevocable
undertakings (approximately 35.71% of the maximum number of New Shares to be
issued under the Rights Issue). Glencore International will be paid an underwriting commission by the Company of US$35.1 million in connection with its undertakings.

Dealings in New Shares, nil paid, are expected to commence on the London Stock
Exchange and on the SWX Swiss Exchange ('SWX') on Thursday, 5 October 2006. The expected latest date for acceptance and payment in full under the Rights Issue
is Friday, 27 October 2006.

The Rights Issue is conditional upon a number of matters that are typical for a
transaction of this nature. If these conditions are not fulfilled, the Rights Issue will not proceed. Shareholder approval is not required in respect of the Rights Issue following the passing of the resolutions at the Extraordinary General Meeting of the Company held on 30 June 2006. Shareholders who choose not to take up their rights under the Rights Issue will be diluted by approximately 33.3% following the issue of the New Shares.

Commenting, Mick Davis, Xstrata Chief Executive, said:

'The buoyant cash flow generation of the Enlarged Xstrata Group and our confidence in the prospects for the business following the first six weeks of ownership of the Falconbridge assets have exceeded our expectations. This has enabled us to reduce the size of the Rights Issue, from the anticipated US$7.0 billion required to be refinanced under the Equity Bridge Facility, to approximately US$5.5 billion net of expenses and is in line with our commitment to maintain an investment grade credit rating and a prudent capital structure that provides the flexibility to fund the enormous organic growth potential within our portfolio. The remainder of the Equity Bridge Facility will be funded through cash flow and/or through alternative means, which may include accessing the debt markets.

'We have been very encouraged by the quality of personnel and assets within Falconbridge since taking control and beginning the integration process into Xstrata's devolved business structure. The initial 30-day stage of that process is now complete and we have confirmed offers of positions with the Enlarged Xstrata Group or redundancies for all former Falconbridge employees.

'We have successfully established two new commodity businesses, Xstrata Nickel and Xstrata Aluminum, integrated the copper and zinc operations to form new business units within Xstrata Copper and Xstrata Zinc and appointed the senior executives across these new structures. Our teams have made excellent progress in transforming the businesses, realigning resources and responsibility within Xstrata's devolved business structure and identifying a number of exciting opportunities for further value creation for the Enlarged Xstrata Group. As a consequence, we believe there is upside potential for additional synergy benefits from the acquisition. The execution stage of our integration process is now underway and we expect this to complete at the end of this year, at which point we will be in a position to provide greater detail on the potential that we believe the Falconbridge Acquisition has delivered to Xstrata. Key priorities for this next stage, therefore, will be the completion of our review of the aluminium business, the ongoing identification and delivery of synergies and the development of the organic growth potential of the Enlarged Xstrata Group.'

AFX

LONDON (AFX) - Xstrata PLC said it is to raise 2.9 bln stg in a 1-for-3 rights issue of 235.8 mln new shares at 12.65 stg each.

Proceeds will be used to partly refinance a 7 bln usd loan which Xstrata secured to fund the acquisition of Canadian miner Falconbridge Ltd in August.

The rest of the money it needs to refinance the loan will come from cash flow and/or through alternative means, which may include accessing the debt markets, said Xstrata.

The issue price represents a 42.5 pct discount to Xstrata's closing middle-market price of 21.98 stg on Monday, it said.

Glencore International, which holds a 14 pct stake in the company, will take up its full entitlements under the offer, subject to a lock-up period of six months.

'The buoyant cash flow generation of the enlarged Xstrata Group and our confidence in the prospects for the business following the first six weeks of ownership of the Falconbridge assets have exceeded our expectations,' said chief executive Mick Davis.

'This has enabled us to reduce the size of the rights issue... and is in line with our commitment to maintain an investment grade credit rating and a prudent capital structure that provides the flexibility to fund the enormous organic growth potential within our portfolio,' he said.

Falconbrige, following the expiry of the offer by Inco Ltd for the company in July, paid Inco a break free of 150 mln usd in July and a further 300 mln usd in August.

Turning to current trading, Xstrata said it continued to trade well since end-June, with demand for commodities remaining robust.

'In the wider market, this demand, together with market supply constraints and long lead times to add new market capacity, has supported prices for the enlarged Xstrata Group's commodities significantly above long-term averages,' it said.

3 October 2006 - Source: Easy Bourse

Xstrata expects significant benefits from new assets


The finance director of Anglo-Swiss miner Xstrata PLC said Tuesday that the company has had a number of approaches for the aluminium assets it acquired as part of its recent purchase of Canada's Falconbridge, although he declined to name the firms involved.

Xstrata is "open to all outcomes for this business," Reid said.

The chief financial officer's comments come as the company unveils a $5.5 billion (GBP2.9 billion) one-for-three rights issue to refinance its acquisition of Canadian miner Falconbridge, announced in August.

Xstrata said it is experiencing significant operational benefits from the new assets and is increasingly confident that it will surpass the synergies expected when the firm first unveiled the deal.

Reid declined to quantify those synergies, but said Xstrata expects them to come from its copper and nickel divisions.

During the course of the Falconbridge deal, Xstrata said it would seek to collaborate with the eventual owner of the Sudbury basin nickel assets held by Canadian mining firm Inco Ltd. (N), which is in the process of being taken over.

Inco's Sudbury basin assets are located next to those of Xstrata and cooperation on exploiting the reserves could result in cost savings and other benefits, Xstrata has said.

Inco's board of directors Sept. 24 recommended that its shareholders accept a $18 billion all-cash offer from Brazilian mining giant Companhia Vale do Rio Doce (RIO), or CVRD, after a protracted bidding war for the company.

Xstrata has an "ongoing dialogue with all major mining companies," Reid said, adding that talks have continued with CVRD. But substantive discussions surrounding Sudbury haven't taken place.

Having had some contact at operational levels with Inco employees, Xstrata feels that there is "huge momentum" to put the businesses together.